Gg Toys Case Analysis Essay
June 16, 2013
Costing systems are components of a broader accounting system used by a given company or organization. Their main function is to keep a focused eye on expenditures made by the company in question. Synthesis of Existing Cost Models to Meet System of System Needs, p.86. G.G. Toy's production process for dolls started with the basic raw materials needed for the bodies of the dolls, wool and things for the hair and clothing and all of these things were consist in production initially. Then, in its modern Chicago manufacturing facility, the company machine-molded the vinyl and resin into doll bodies and even had varies different styles and designs for the …show more content…
Since the excess capacity created would be used only for few months, it would lead to large volume variances where, for example, it would reflect failure to reach production levels built into the overhead rate. Accounting for the unused capacity there is lost profit margins that are traced to not use it to its full capacity. They will determine the full cost of the used amount. And when it is determine which the determination will also include the cost of the machines depreciation, the cost of all its resources will be used when trying to achieve the capacity.
If the company were to use the reindeer dolls, the materials, shipments, costs nor the setup would be affected, if they use the left overs. But using the same products would have an effect on the costs for the Geoffrey and Specialty dolls . The costs per driver and pool would have to be recalculated also. Multiplying the cost pool for that particular doll with the cost driver per unit and their sum will help in finding the total